There are a million funding stories in the tech industry every week. And most of them aren't particularly newsworthy.
But the news that ecommerce startup ShopRunner raised $75 million from Chinese Internet company Alibaba has a pretty delicious backstory.
Alibaba is a huge, powerful ecommerce company doing tons of business in China.
But in the US, Alibaba is best known as a company that Yahoo invested in years ago.
It was a brilliant investment by Yahoo.
It was such a smart move, in fact, that by 2011, Wall Street investors had decided that Yahoo's stake in Alibaba, and another Asian investment, Yahoo! Japan, were actually worth more than Yahoo's core business.
The problem was, Yahoo wasn't doing much to "unlock" that value for investors. Instead of liquidating some of its stake an returning the funds to investors, Yahoo was just idly holding on to its stock.
Finally, someone decided to do something about it. That someone was Third Point hedge fund manager Dan Loeb.
Loeb bought a 5% stake in Yahoo and began a letter-writing campaign demanding a seat on Yahoo's board so that he could help it hire a CEO and do something with the Asian assets.
Instead of listening to Loeb, Yahoo's board hired a CEO named Scott Thompson from PayPal.
As Yahoo CEO, Thompson tried to compromise with Loeb. Thompson refused to put Loeb and his allies on the Yahoo board, but he did strike a deal with Alibaba. He sold a minority of Yahoo's stake in Alibaba back to Alibaba for about $7 billion.
Over the past year, Yahoo has used that $7 billion to do exactly what Loeb wanted: return the funds to shareholders by buying back shares. Yahoo stock is up from about $14 to $28 since Loeb took his position – thanks mostly to Thompson's deal with Alibaba.
But, back in the Spring of 2012, Thompson's attempt at a compromise with Loeb did not work.
Loeb wanted to "unlock" the Asian assets AND he wanted board seats for him and two allies.
So, in May 2012, Loeb dropped a bombshell.
He wrote a letter pointing out that while Thompson's official biography, filed with the SEC, said he had a degree in Computer Science, Thompson did not actually have a degree in Computer Science.
A couple weeks later, Thompson resigned.
In July, Thompson landed a new gig.
He was the new CEO at an ecommerce startup called ShopRunner.
Loeb never appreciated Thompson's deal-making ability, even though it was the main reason Loeb profited about $1 billion from his Yahoo deal.
It seems that Alibaba, the people across the table from Thompson, were more impressed. $75 million impressed.
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